Subscribe to our free social sector news and jobs services!

Stay informed with Australia's number 1 resource for the social sector.

Breaking national NFP news

Jobs and career opportunities

Conferences and events from across Australia

Plus: Sign up today and receive a FREE copy of our Executive Webinar: Government Relations for Not for Profits - A Tactical Approach.

First Name

Last Name

Email Address*

Post Code*

Subscribe to our email bulletins:Pro Bono News | Social sector news bulletin. Sent every Tuesday and Thursday morning.Pro Bono News | Good Business edition. Sent on the first Wednesday of every month.Pro Bono Careers | Purpose-driven job alerts & career news. Sent every Monday morning.Pro Bono Resources | Sector specific professional tools & webinar updates. Sent once a week.Subscriber Offers | Exclusive sector content from our supporting partners. Sent once a month.

Under new tax rules the idea of “salary packaging” for employees in the Not for Profit sector may sound all too hard. However our expert in this area offers some guidelines and advice.

Anton Gaudry, who specialises in salary packaging for Not for Profits says all public benevolent institutions (PBIs) and FBT rebatable employers such as associations, schools and community groups should consider offering employees a choice of fringe benefits as part of their remuneration.

Under the tax laws, Gaudry says there is a great opportunity to mix and match “salary” for an equivalent amount of “fringe benefits”.

Gaudry says as an example that for taxation purposes, the employee pays the tax on “salary”, but the tax on fringe benefits is actually paid by the employer, subject to special concessions only available to Not for Profits.

He says one of the tax concessions allows organisations to provide each employee a certain level of fringe benefits without the payment of fringe benefit tax (FBT).

This means that an employee can have a salary package that substitutes salary for fringe benefits without the payment of FBT.

Similarly, fringe benefits are not subject to income tax, however the tax office has set a dollar limit on the concession of up to $30,000 per Not for Profit employee ($17,000 for hospitals).

Gaudry says if you substitute salary for fringe benefits, no tax is paid on the fringe benefits up to the limit and this only applies to Not for Profits.

Here’s an example: If your salary is $30,000, the amount above $20,000 (ie. $10,000) is taxed at your marginal tax rate (ie. 31.5% as per table). Therefore, for the salary amount above $20,000, the after tax amount is only $6,850 (ie. $10,000 less $3,150 tax). By ‘salary packaging’ this $10,000 (eg. the amount is now paid directly off your mortgage or credit card), your remuneration becomes $20,000 salary and $10,000 in fringe benefits (total $30,000, same as before). However, you are NOT taxed on fringe benefits and you save $3,150 in tax. Therefore, the after tax value of your remuneration increases by $3,150.

Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?